Transfer of Property Act Section 66 — Waste by mortgagor in possession

CHAPTER IV OF MORTGAGES OF IMMOVEABLE PROPERTY AND CHARGES — Rights and Liabilities of Mortgagor

General

Summary

A mortgagor who is in possession of the mortgaged property is not responsible to the mortgagee if the property simply gets worse over time on its own. However, the mortgagor must not do anything that destroys the property or causes permanent damage, if the property’s value is not enough to cover the mortgage debt, or if such an act would make the value insufficient. For this purpose, the security is considered insufficient unless the property’s value is at least one-third more than the amount owed on the mortgage, or at least one-half more if the property consists of buildings.

Official Text

A mortgagor in possession of the mortgaged property is not liable to the mortgagee for allowing the property to deteriorate; but he must not commit any act which is destructive or permanently injurious thereto, if the security is insufficient or will be rendered insufficient by such act.

Explanation.—A security is insufficient within the meaning of this section unless the value of the mortgaged property exceeds by one-third, or, if consisting of buildings, exceeds by one-half, the amount for the time being due on the mortgage.